patent reform billOn September 16, 2011, President Barack Obama signed into law the America Invents Act, a statute which may bring about the most comprehensive overhaul to our nation’s patent system since 1836.  The America Invents Act promises to bring United States patent law into conformity with international patent law (a necessity in a global-market).  One of the ways in which it will do so is by effectuating a change from a “first to invent” to a “first to file” system.  In addition, the Act restricts the way defendants may be joined in patent litigation.  The White House maintains that the changes in the patent system brought about by this Act will spur the creation of jobs, cut red tape, and reduce unnecessary patent-related litigation between competing innovators.  There are numerous critics, however, who believe the Act will, in fact, kill jobs, deter innovation, and harm small business at the expense of large corporations.

A patent is a set of rights furnished an inventor relative to a new object, process or design.   The patent system is intended to protect the inventor from competitors by providing the inventor the exclusive rights to market, manufacture, and sell the invention for the term of the patent.  This right is bestowed upon the inventor by the United States Patent and Trademark Office (“USPTO”), in exchange for making the invention available to the public.  In order to obtain a patent, the inventor must submit an application to the USPTO, and provide a list of “prior art” from which their invention was derived.   In order to receive a patent, an invention must be “novel” or take the “non-obvious” next step of a prior invention.

Although the America Invents Act touches on virtually every aspect of patent law, perhaps the most significant change in U.S. patent law will result from the enactment of a “first to invent” system of patent registration, a system currently employed internationally.   Under the current U.S. system, when there are rival patent applicants, the patent is awarded to the applicant who was first to invent the subject of the underlying patent, regardless of who filed their patent application first.  Although this system seems fair, it often leads to lengthy and expensive litigation, as both applicants attempt to prove that they first conceived the subject idea.   Moreover, the current system allows an inventor who conceived an idea, but who is not taking steps to realize their innovation, to stand in the way of other inventors who invest time and money to bring a similar idea to fruition.  In other words, many times the current system employed in the United States stands in the way of innovation rather than promoting it.  Under the “first to file” system, however, a patent is awarded to whomever first files their patent application.  The new system should provide a bright line rule which is expected to reduce litigation between competing applicants and diminish the backlog of applications, which currently stands at roughly 750,000.  In addition, by forcing inventors to come forward and file an application in order to protect their rights to the invention, the new law will theoretically provide incentives for inventors to invest in developing their ideas.

In addition to “first to file,” a major provision in the Act restricts the joinder of defendants in patent infringement cases.  Pursuant to the Act, plaintiffs may no longer sue multiple defendants in the same suit based “solely on allegations that they each have infringed the patent or patents in suit.” Some believe that such a rule may deter suits due to the expense associated with the filing of multiple suits in several jurisdictions against the alleged infringers.  A recent article written by Al Turco, a reporter for Lawyers Weekly, offered that many others, however, disagree and maintain that the new joinder rules may decrease the number of defendants in each case, but may actually increase the number of patent infringement lawsuits. They argue that the only thing the new rules will do is drive up the cost of litigation for both plaintiffs and defendants.

Although it remains to be seen whether the patent reform brought about by the America Invests Act will succeed in simplifying the patent system and provide incentives to innovation, it stands to reason that the adoption of a system employed internationally will bring about a positive change in an increasingly global market.  In the short-term, litigation is likely to increase as interested parties seek clarifications with respect to the particulars of the “first to file” system.  Over time, however, the new system appears likely to reduce disputes, which should allow the USPTO to focus on whether the innovation actually warrants issuance of a patent, which is an issue for another day.